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Natura is the reigning queen of Brazil’s highly attractive and…
Natura is the reigning queen of Brazil’s highly attractive and competitive market in cosmetics, perfume, and hygiene products. But it is essentially unknown outside of Latin America. As it embarks on global expansion, does it have what it takes to be as successful as it has been at home?
Many people agree that Brazil is beautiful. Likewise, Brazilians are widely considered to be among the world’s most beautiful people. However, beauty has to be maintained. Brazilian women’s spending on beauty products is legendary. Although Brazil has the world’s fifth-largest population (with 200 million people) and the seventh-largest economy, it is the second-largest market for beauty productssecond only to the United States. Beauty products spending per woman in Brazil matches that in Britain, which has a much higher per-capita income. While Brazil is obviously the attractive “B” in BRICS (Brazil, Russia, India, China, and South Africa), beauty products are among Brazil’s most attractive consumer markets, with multinationals such as Avon, Estée Lauder, L’Oréal, Mary Kay, P&G, Shiseido, and Unilever salivating over a share of the growing spoils. Emerging as the leading foreign player, Avon sold more cosmetics in Brazil than in the United States (its home country). Yet, the reigning queen of Brazil’s highly promising and competitive market is the homegrown Natura. Natura is everywhere in Brazilits cosmetics, perfume, and hygiene products are in 60% of all households, and it leads the market with $3 billion in annual revenue and a 14% market share. Founded in 1969 and listed on the São Paulo Stock Exchange since 2004, Natura has become the world’s 20th most-valuable cosmetics brand. But because 90% of its sales are marketed in Brazil and almost 100% of its sales are in Latin America, few people outside the region have heard of it.
How has Natura been able to dominate such a large and diverse market? Its recipe has at least two ingredients. First, by definition, Natura is green. Approximately 70% of its products are plant based, and 10% come from the Amazon region, where it purchases from village cooperatives and indigenous tribes. In addition to soccer and beaches, many people associate Brazil with the rainforest and biodiversity, which seems to be an obvious marketing advantage for a firm that calls itself Natura and uses a heavy dose of ingredients from the Amazon. Natura is also among the first cosmetics firms in the world to pay attention to the specific haircare needs of black women, which are often ignored by mainstream firms.
Natura relies on a small army of 1.2 million direct sales agents, who work like the legendary Avon Ladies. Since 2006, Natura’s agents had been beating the Avon LadiesNatura’s number-one foreign rival. Since 1974, its marketing has relied on direct sales, leveraging hardworking women who go the extra mile to deliver products (sometimes literally penetrating the jungles of the Amazon). Direct sales thus give Natura a cost advantage relative to its number-one domestic rival, O Boticário, which relies on a traditional retail format. An additional plus of direct sales is that Natura’s sales force is directly in touch with end users, whose needs, wants, and aspirations can be conveyed back to headquarters for new product development. Unfortunately, the direct sales model recently suffered severe setbacks thanks to the COVID-19 pandemic. Natura was forced to pivot rapidly toward online sales.
Facing the onslaught of multinational cosmetics giants, Natura has realized that its best defense is offense. In 2005, Natura opened its first boutique in Paris, announcing its arrival in the cosmetics capital of the world. While Brazil is famous for commodity exports such as coffee and soybeans, no Brazilian consumer brand has made a big splash overseas outside of Latin America. As a result, Natura has embarked on a multibrand, omnichannel (multichannel) strategy globally. In 2013, it acquired Australian luxury skin-care brand Aesop (an $80 million deal). In 2017, it bought British cosmetics firm The Body Shop from L’Oreal ($1 billion). In 2020, Natura acquired the very company that it had long emulated: Avon ($2 billion). These acquisitions have made Natura the world’s fourth-largest cosmetics firm. They also give Natura access to 30 new markets, including in China and Eastern Europe. Marketing overseas, while Natura is leveraging Brazil’s positive country-of-origin effect of being beautiful, does it have what it takes to be as successful as it has been at home?
Discussion Questions
Q1. From the four Ps of marketing, explain why Natura’s marketing has been so successful in Brazil.
